Could Apple's electric car reach a broader audience?
The tech giant is remaining mum about its plans for a partially-autonomous electric car, rumored to be launching in 2019.
In typically secretive fashion, Apple appears to be moving forward with its long-rumored electric car project, now given a shipping date of 2019, The Wall Street Journal reported on Monday.
Codenamed “Project Titan,” the car has already invited reams of speculation since February, when news first broke about the project. The Journal reports that it will likely be partially-autonomous rather than the kind of fully self-driving car that rival Google is now testing on roads in Cupertino, Calif. and Austin, Tex.
As reports of mysterious shell companies, specialized workers poached from other firms, and sniping from traditional automakers abound, determining just what the the company intends to do with the project has quickly become its own cottage industry.
But one large scale question looms over much of the project. As the market for electric cars continues to grow, just what kind of consumer is Apple aiming for with the project?
Given Apple’s history of launching products aimed at more premium markets, typically at a higher initial retail price, analysts say it’s unlikely the company will break the mold by debuting an affordable electric car.
“If you look at Apple’s history, every product they’ve done has tended to be very high margin,” says Sam Abuelsamid, an senior analyst at the market research firm Navigant Research who focuses on the auto industry. “They tend not to go into low margin segments, which the auto industry is very much in.”
Despite rampant speculation about the 2019 shipping date, Mr. Abuelsamid says the rumored launch is “probably optimistic.” Apple faces a number of design issues, he says, including whether to manufacture the car bodies themselves or hand them over to a third party, as carmakers like BMW and Porsche are doing with some models.
So far, the market for electric cars appears to be divided between relatively affordable models by traditional carmakers such as Chevrolet and Volkswagen, which have sold fairly modestly, and luxury models by BMW and Tesla, which come at a much higher price tag.
The Tesla Model S, for example, which starts at $75,000, is currently the top-selling fully-electric car, with 15,100 units sold in the US as of August, the Journal reports. By contrast, an electric version of the Volkswagen Golf, which starts at $26,116 had sold 2,212 units.
Some analysts say the market for electric cars, which has grown relatively slowly, represents a new opportunity for technology companies to expand their reach.
“The shift to electric reduces the mechanical complexity of cars a great deal. No transmission or internal combustion engine means far fewer moving parts,” writes Benedict Evans, an analyst at Andreessen Horowitz, a Silicon Valley venture capital firm that invests in technology companies, in a blog post in August.
In order to compete with dedicated carmakers like Tesla, which sells its cars directly to consumers through its own stores, Abuelsamid says Apple could consider introducing a leasing program modeled on its recently released iPhone upgrade program. That program allows customers to upgrade to a new phone every year by making small monthly payments over a two-year period.
In a blog post laying out a similar program for cars, Abuelsamid says Apple could consider leasing new cars to customers, who would pay a monthly rate – like a Netflix subscription – for access to a small number of Apple car models. As with the phone program, it would ensure that subscribers remained customers for as long as possible, he adds.
Despite the ongoing rumors, news from the tech giant about its plans has been vague. “The car is the ultimate mobile device,” Apple Senior Vice President Jeff Williams said in May during a conference hosted by technology site Re/Code. “We’re exploring a lot of different markets.”
In what’s become a frequent refrain for Apple – which has often promoted its products as “game-changing” – Mr. Williams told conference attendees the company’s key priority in choosing what types of products to focus on next isn’t what will generate the largest amount of revenue. Instead, the company says it wants to focus on products “we think we can make a huge amount of difference.”
While it appears that the idea of an Apple-designed fully self-driving car may be on the backburner for now, the Guardian reported on Friday that Apple executives met with officials from California’s department of motor vehicles in August “to review [the] DMV’s autonomous vehicle regulations.” The department has issued testing licenses for self-driving cars to several carmakers, including BMW, Honda, Tesla, Volkswagen, Nissan, and Mercedes Benz.
In May, the company began negotiating with officials at GoMentum Station, a former military base near San Francisco, about testing self-driving cars on the base’s nearly 20 miles of highways and paved streets, the Guardian reports.
Reactions from other carmakers about the rumored Apple car – self-driving or not – have been mixed. Tesla’s chief executive officer Elon Musk has said he “hopes” Apple continues to make inroads in developing a car and Apple’s chief executive officer Tim Cook has met with Sergio Marchionne, his counterpart at Fiat Chrysler – which has its own electric vehicle – but some automakers have expressed skepticism about the project.
They’re particularly concerned that Apple could partner with another automaker to produce the car bodies while the tech giant would develop the software controlling the car on its own.
“We do not plan to become the Foxconn of Apple,” Dieter Zetsche, the chief executive of Daimler, told reporters at the Frankfurt International Motor Show earlier this month, referring to the controversial Taiwanese company that makes components for the iPhone, iPad, and other products.
Abuelsamid says other carmakers are trying to warn Apple about the difficulty of entering the car market, especially given the challenges of meeting stricter regulatory standards applied to cars compared with computers or mobile devices.
But, he notes, “Apple is in a unique position because they have the financial resources that nobody has. They could certainly be a serious threat if they chose to be.”